Monday, June 22, 2009

Just a little late, federal regulators take action against Madoff schemers

Well, we all figured one guy couldn't steal $65 billion on his own, didn't we? Today, the U.S. Security and Exchange Commission began shedding some light on how disgraced Wall Street kingpin Bernard Madoff made off with tens of billions, in full view of government regulators and everyone else, by bringing civil fraud charges against auditors and a Hollywood investment adviser for allegedly advancing the massive investment scheme. At least the regulators, whose job it is to prevent this kind of crap from happening, have finally decided to stop sitting this one out -- not to stop or prevent the fraud, just to exact a little after-the-fact justice. In three lawsuits filed in federal courts in New York, the SEC accused executives of a Madoff-founded brokerage of helping to cook the books and accused a high-profile Hollywood investment adviser of knowingly steering wealthy clients to the scheme in exchange for hundreds of millions of dollars in fees, according to the New York Times. The new filings revealed more about how Madoff and his associates were able to perpetrate the massive fraud for decades. One of the lawsuits claimed California money manager Stanley Chais, who handled investments for famed Hollywood director Steven Speilberg, demanded that Madoff never show losses in any Chais account, the Times said. An attorney for Chais, Eugene R. Licker of Loeb & Loeb, denied the SEC accusations. “Like so many others, Mr. Chais was blindsided and victimized by Bernard Madoff’s unprecedented and pervasive fraud,” Mr. Licker said in a prepared statement. “Mr. Chais and his family have lost virtually everything — an impossible result were he involved in the underlying fraud.” Executives of Cohmad Securities Corp., the brokerage that had offices alongside Madoff's, who were named in the suits included Maurice J. Cohn, the co-founder and chairman; Cohn's daughter, Marcia Beth Cohn, the president and chief operating officer; and Robert M. Jaffe, the vice president. A third suit was filed in federal bankruptcy court by the bankruptcy trustee, Irving Picard, seeking Madoff assets to distribute to victims. A lawyer for Cohmad and the Cohn family, Steven R. Paradise of Vinson & Elkins, denied any knowlege of the scheme. “Our clients continue to be as shocked as anyone at the revelations,” Paradise said. “We look forward to the opportunity to challenge both the S.E.C.’s and Mr. Picard's allegations in court.” Attorneys for Jaffe called the SEC lawsuit impulsive and self-justifying. Madoff, who pleaded guilty to fraud charges in March, is scheduled to be sentenced June 29.